Trump Raises the Stakes in Trade War

We’re only five days into the trade war with China, but the White House is already raising the stakes. The Trump administration announced a new round of tariffs on $200 billion in Chinese business and consumer goods Tuesday, causing U.S. markets to slump amid fears that the tit-for-tat dispute between the two superpowers would continue to spiral.

U.S. Trade Representative Robert Lighthizer announced the new action, saying it was designed to punish China for unfair trade practices as well as the retaliatory actions it took after the Trump administration slapped $34 billion in initial tariffs on Chinese goods last week.

“For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition,” Lighthizer said in a statement. “We have been very clear and detailed regarding the specific changes China should undertake… Rather than address our legitimate concerns, China has begun to retaliate against U.S. products.”

China, which has pledged all along it would respond to aggressive U.S. trade moves in kind, said it would “take firm and forceful measures” in response to the escalation. The tariffs announced Tuesday will not go into effect until after August 31; during the last round of tariffs, China waited until the day the Trump administration acted to retaliate with tariffs of their own.

Although last week’s tariff package was already wreaking havoc in certain export-dependent industries, its effects on the larger U.S. economy were expected to be modest. But as the size and scale of the trade war grows, more industries are likely to begin to feel the squeeze. Business lobbies around the country are sounding the alarm, with the U.S. Chamber of Commerce first among them: “The administration is threatening to undermine the economic progress it worked so hard to achieve,” President Tom Donahue said in a statement last week. “We should seek free and fair trade, but this is just not the way to do it.”

Some business owners also worry that China’s undemocratic government will give it more leeway to play hardball in a long trade war of attrition. “I think the whole problem is, you know, Trump’s got to get elected again and these guys don’t. So they can do whatever they want with no repercussions,” Illinois farmer James McCune told THE WEEKLY STANDARD. “What people in this country don’t understand is how hard it is to get anything done with those guys when they can do whatever they want.”

Trade experts expect those hardball tactics may include an intensification of the same bad trade practices the Trump administration is trying to punish in the first place, such as disruptive government intrusion in the finances of U.S. companies operating in China. Quoting unnamed Chinese officials, the Wall Street Journal reported that Beijing is considering asymmetric measures including “holding up licenses for U.S. firms, delaying approval of mergers and acquisitions involving U.S. companies and ramping up inspections of American products at borders.”

Even as the Trump administration continues to play tough with China publicly, officials are beginning to feel the pressure of the economic damage a trade war could inflict. Politico reported Wednesday that Mike Pence has been meeting quietly with major Midwestern donors to reassure them that the administration recognizes the precarious place farms and businesses are in. Meanwhile, President Trump continues to tweet a good game, announcing Wednesday morning that he is “always thinking about our farmers.”

“Other countries’ trade barriers and tariffs have been destroying their businesses,” the president tweeted from a NATO meeting in Brussels. “I will open things up, better than ever before, but it can’t go too quickly. I am fighting for a level playing field for our farmers, and will win!”